A New York judge dropped all criminal sexual assault charges against ex-IMF chief Dominique Strauss-Kahn on Tuesday after prosecutors lost faith in the credibility of his accuser. But the formal end of the case awaited the outcome of a last-ditch emergency appeal. New York State Supreme Court Justice Michael Obus accepted the prosecutors' request for dismissal of all charges. The move left the man once seen as the leading contender to be the next president of France close to freedom and the chance to try to rebuild his tarnished political career.

The former head of the International Monetary Fund left the court smiling with his wife Anne Sinclair by his side, saying in a statement his life had been a "nightmare" in recent months and that he looked forward to returning to more normal times. Strauss-Kahn was not yet free to return to France, after New York State Supreme Court Justice Michael Obus stayed his dismissal of the case for an emergency appeal.

A lawyer for the accuser, hotel maid Nafissatou Diallo, had requested a special prosecutor to continue the criminal case. Earlier on Tuesday, Obus dismissed the request. But Diallo's lawyers appealed that decision. Obus said the appeal's court would rule on that later on Tuesday, meaning Strauss-Kahn must await that verdict before he is free to return to France. Prosecutors from the office of Manhattan District Attorney Cyrus Vance on Monday outlined how they lost faith in the accuser, hotel maid Nafissatou Diallo, a 32-year-old immigrant from Guinea who alleged Strauss-Kahn attacked her in his luxury hotel suite and forced her to perform oral sex.

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France cuts growth outlook slaps rich tax

France slashed its growth outlook and announced 12 billion in extra budget savings this year and next, ranging from cuts in tax exemptions to a new levy on the wealthy, to shore up its prized AAA credit rating. Prime Minister Francois Fillon said the government had cut its growth forecast for both 2011 and 2012 to 1.75% of GDP, citing a darkening outlook for the global economy amid fears of mounting debts in the West.

Economists had said that France's over-optimistic growth forecasts of 2% for 2011 and 2.25% for 2012 were undermining the credibility of its fiscal policy. Unveiling a package hurriedly stitched together in the wake of the US credit downgrade this month, Fillon said the bulk of the savings would come from eliminating 5.9 billion in tax exemptions on everything from private health insurance to real estate capital gains and value-added tax on theme park tickets.

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France unveils plan to lift revenue as it cuts growth forecast

France on Wednesday announced a set of austerity measures aimed at securing challenging deficit-reduction goals amid stalling economic growth and at reassuring investors about the country's creditworthiness. The initiatives mostly targeted large companies and high earners; the government said that would limit the fallout on the economy. But the austerity package could prove a bitter pill for upper-middle-class French people, the traditional support base of President Nicolas Sarkozy's conservative party, less than eight months ahead of the presidential election in which he is widely expected to run.

Prime Minister François Fillon said the measures should boost Mr. Sarkozy's credibility as a responsible manager of the economy. "Credibility will be a central issue in the coming election," the prime minister said. The government cut its growth forecast for this year and next, though its estimates remain higher than those of many private economists. It sliced its forecast to 1.75% this year from 2% previously, and said it expects gross domestic product to expand the same amount next year, down from 2.25% forecast earlier. Mr. Fillon said the slowing situation in the U.S. and the European sovereign debt crisis prompted the shift by the government.

"It would be irresponsible to not take into account this situation and to base our strategy of deficit reduction on overly optimistic scenarios," he told a news conference. "Reality drove us to adjust our growth estimates. We made sure to adopt measures that won't break the growth engine." The revision comes after French growth stalled in the second quarter as households cut spending sharply. Weaker-than-expected growth could result in lower tax revenue and higher spending on unemployment benefits.